It's not all about unicorns and rainbows... but they are vital to your success

A fairly simple concept occurred to me the other day, really the result of a number of conversations that all went along similar lines - why is my [ role | organization | department | service | pitch ] (delete as applicable) not valued?


What it boils down to is this - whatever it is you deliver, you need balanced delivery.  You need things that are happening now.  You need stuff that promises a bright future.  You need value that covers the basics.  And you also need to deliver beyond the basics.


When you throw all that into a quadrant (like I love to do with pretty much every idea I ever had), and give those things labels, this is what you get;

To be perceived as delivering value sustainably, my thinking is that you need to deliver stuff that fits into every quadrant.  You need Pebbles that quickly establish that everything is under control.  Rocks that make it clear you can be left to get on with it and things won't fall over.  Unicorns that demonstrate a capability to do more than the just the basics.  Rainbows that keep people excited for the long term.


This isn't just for your customers either.  Getting the balance right is highly motivating for everyone involved.

What the hell is e-content anyway?

Why getting e-content right is vital to your business survival.

As mentioned in the previous article, the value chain of the future will be very different to what we know today.

In this connected value chain, a direct interface is enabled between all contributors and the consumer.  This means that not only can the connector ensure that the consumer is connected to the most appropriate contributors, but also that the contributors can specifically address the desires of that consumer.

As a result waste is reduced significantly.  Much more so than could be achieved with a traditional value chain.  Contributors are able adapt their offerings to perfectly match each consumer. 



The connected value chain

 

For established businesses, particularly those that rely heavily on branded offerings, this presents a very significant threat.  It’s also an opportunity, but I am calling it out as a threat because the barriers of survival are going to be greater than the barriers of entry.  This will level the playing field, as almost overnight large branded businesses lose a large portion of their competitive advantage.  These incumbents will need to reformat their business to operate in a very different environment.  The trouble is that all those parts of the business that previously were required to define how to connect with their partners will no longer be required.  Unfortunately they will most likely be tightly embedded across their entire organization, due to the relentless pursuit of efficiency.

That brings us to e-content and the role it plays in the connected value chain.  If you think of the connector business as the road network, the e-content is the map that enables consumers to find their way.

Therefore, connectors will use e-content together with the connected value chain to determine the perfect product for the consumer.  It is imperative for any contributor that their e-content represents their products affinity to their consumers’ desires.  It needs to accurately and consistently provide all the relevant cues that enable the connector to offer appropriate options, and for the consumer to make the right selection.

So far it all doesn’t seem that big a deal, right?  Sure, big business needs to restructure.  Big brands need to re-think how to represent in a connected world.  None of that is new, so what’s the problem?

The issue is trust – more specifically, the method of generating trust.  Trust is like oxygen to a brand, without trust a brand will quickly fail.

Let’s take a look at trust for moment – it is acknowledged to be built through the equation of credibility + reliability + intimacy, tempered by self-orientation (as defined by David Maister).  In a traditional value chain, it cumulates through scale.  The prevalence of a brand reinforces the trust through social evaluation, which creates an exponential impact.  The whole logic of ‘lots of people buy into the brand, so it must be good’.  Effectively the greater prevalence of a brand, the more inherent trust is generated. 

This situation has always made it harder for new businesses to enter a market, as it takes time to build a brand to scale.  It’s hard work, and takes considerable investment and time.  In a traditional value chain, launching a brand is like trying to turn the tide.

The ttrust equation (David Maister)

 

With the connected value chain, the equation is the same, but is no longer cumulative.  This means that new entrants to a market can generate trust almost instantly.  The connectors simply connect prior with potential consumers.  This means the social evaluation is no longer based on quantity of experience, but quality.  In this new connected world, the individual can have more influence than the masses.  The logic switches to ‘The prior consumers who are just like me rated this product well, so it must be good’.  It’s still necessary to generate a wave, but once you have done that you can ride it indefinitely.

So does this mean the end of brands?  Most assuredly not.  Remember that brands are not about logos and fancy fonts, but about building affinity between product and consumer.  As mentioned, e-content is like the map that enables the consumer to find their way.  Branding is doing that in such a way that ensures the consumer stays engaged for the journey.  It provides the building blocks needed to generate affinity in a connected world.  It represents the branding of the future.

Sure, right now e-content is pretty one-dimensional, but that is changing fast.  Don’t make the mistake of thinking it’s just a re-invention of the master data we use to connect one contributor to another.  Connecting businesses will develop algorithms to use this data in ways we can’t even imagine yet.  As a result, it will learn.  It will predict.  Above all, it will enable. 

If you don’t believe me, check out Alexa and think through the implications when your consumers are conveying their desires through speech.  What will they say?  And how will you build your e-content to ensure that Amazon selects your product over the competition?


Welcome to a world driven by e-content, where it's easier for a new player to compete than an established one.  Welcome to the connected value chain. 

 

The Value Chain Revolution

What the advent of a connected value chain means for your business.

In a previous article, Innovative Products to Innovative Solutions, we explored a world where consumers would expect much more from the brands they trust.  This time, I wanted to more closely examine the dynamics that are making this real.

So - consider a typical value chain – it will be made up of several businesses, each which contribute to the value of the final product.  They each play their role, and also build a connection to those adjacent in the chain.

The challenge for such an array of contributors is to work together as efficiently as possible, while at the same time competing for a greater portion of the overall chain.  Independent organisations such as GS1 and industry self-regulators have emerged in an attempt to minimise waste.  These groups together moderate the balance between competition and connection by defining standards that drive efficiency and prevent competition that might damage the industry.  Still however, waste is prolific throughout the value chain.

Waste is defined as processes which consume more resource than necessary when adding value to the final product.  Waste has most famously been categorized by Taiichi Ohno.  Muda, or Ohno's Seven Wastes

One of the key reasons for this waste is the gap between each contributors’ perception of value and the reality.  With the data flow interrupted at every stage of the value chain, it is almost impossible to accurately determine what is actually desired by the consumer.  Each contributor must somehow engage the consumer directly.  This is inefficient and therefore expensive.

Each business contributes value to the overall chain, eventually resulting in a product that is consumed

As we move more into the Information Age, a new type of business has emerged – that of the connector.  As they embed themselves more into our society, so does the role of the traditional business need to change. 

Connecting functions of traditional businesses are no longer required, and so those businesses need to adjust their operations to focus solely on contributing value, not connecting consumers to that value.

Essentially, each business will become either a contributor or connector; contributors are those that create the value, the connectors are those that disseminate it.

In this connected value chain, a direct interface is enabled between all contributors and the consumer.  This means that not only can the connector ensure that the consumer is connected to the most appropriate contributors, but also that the contributors can specifically address the desires of that consumer.

As a result waste is reduced significantly.  Much more so than could be achieved with a traditional value chain.  Contributors are able adapt their offerings to perfectly match each consumer. 

A new type of business now connects the value chain, not creating value itself but enabling it

Consider ebay – they simply create connections, between buyers and sellers.  Airbnb, uber – these may be more specific in execution, but not in principle.  Although the commercialization is not so obvious, Google does the same for information, facebook for social interaction.

The end result of this is that a whole bunch of stuff embedded in an established contributor business is no longer an asset, and as such has become a liability.

For new players, it’s not a problem.  They just don’t add any of that stuff in the first place.  Most of that stuff is what used to make it hard to enter an industry.

Uber is a great example of this.  To provide private vehicle transport where uber is available, you don’t need anything more than what most people already have – a car and a phone.  The barriers of entry into this industry are now incredibly low. 

For the incumbent taxi firms things are not so easy – each cab is riddled with expensive hardware, payments, navigation, radio, lights, and they cannot easily be repurposed.  Think about the reason for that hardware for a moment – they all enable specific connections.  The bank for payment, the mapping for navigation, the radio to take on bookings – even the light on the roof is to connect with potential consumers as they drive by. 

Those items were necessary to enable the value chain, even though they didn’t add value for the consumer.  With the connected value chain, they have become a liability that do not provide an advantage.

This situation presents a real danger to any entrenched business – an environment where the barriers to survival are greater than the barriers to entry. 

The result is rapid and disruptive, a genuine revolution. 

Find out how to prepare in the next article.

Defining relevant innovation – the elusive ‘credible challenge’

Credible challenge – what is it, and why is it important? 

In order for something to be credible, it requires belief.  Belief not only that each associate will be affected by the challenge, but that they can influence the outcome.  Belief that the challenge is possible, but also difficult.  Above all, belief that the challenge has relevance to the group.  It’s this last piece that I want to focus on, how to establish the belief in your stakeholder group that the defined challenge is relevant.

Relevance in this context can really be defined through evaluating ease of execution, of both your own and competing business.  This is not to say that any products or services in your market are irrelevant.  The opposite is true – all products and services in your market are relevant.  Depending on the evaluation, the challenge should be approached differently.  The intent is to drive relevance and ultimately support the credibility of the defined challenge.

The key is understanding that it is not the challenge itself, but the response required, that drives relevance for the stakeholder. 

Product mapping quadrant

 

The model above demonstrates an appropriate response for each product or service in a market, based on evaluating the ease of delivery.  Note that this evaluation is intended to cover any and all aspects of business support.  It should not be limited to the purely technical capability of production.  For example, a critical aspect of this holistic view is the profit margin and the level that is deemed acceptable.

The response in each case should be to drive the consumers accessing those products or services into the core business quadrant, by altering or switching the product. 

It is important to note here that ‘innovation’ does not include dabbling in the core business quadrant.  Although these changes to products identified as core business might be important to execute, they do not represent a challenge and will not have any significant impact on the market.  Therefore they cannot meet the definition of credible challenge.

The glaring hole in everything I have described so far (just in case you didn’t spot it) is that I haven’t included the introduction of *new* products – only the evaluation of existing ones.  As a consequence, we have also ignored the possibility of significantly growing the market. 

To be fair, this is partly deliberate, as my intent was to cover the larger business point of view, where significant market disruption is to be avoided.  If this is not possible, at least the pace of disruption should be controlled.  Ideally each product falling into the convert to alternative quadrant would spawn a successive but largely equivalent product into the reduce cost quadrant.  In reality however, genuinely new to market products could be introduced into the reduce cost quadrant, simply as a response to grow the market.  If you expand these lines of thinking, an individual product will have a lifecycle through the model.

Product mapping quadrant showing typical lifecycle

 

The interactions are in reality much more complex, with consumers shifting in and out of complex repertoires.  However, the intent of this model is to identify product innovation responses which are self-evidently relevant to the stakeholders involved in the process. 

Defining a preferred shape of products in a particular quadrant (which ultimately sets the boundaries between the quadrants), and how much of the portfolio should sit in each quadrant, will enable effective prioritization.  This prioritization can then drive a sustainable and relevant product portfolio, with new products feeding in at one end and obsolete products exiting then pipeline at the other. 

Why is my business not innovative?

Back to innovation for this article – and I’ll do at least one more follow up in the next week or so.

I wanted to explore why large businesses don’t seem to be able to successfully innovate.  As with anything, there are plenty of well-reported exceptions, but considering the level of investment in innovation those businesses make, I think my generalization is justified.

I have a theory around what a business needs to be able to innovate – there are three key elements; a credible challenge, means to deploy and conviction to deliver. 

Credible challenge is a threat or opportunity that the business associates feel direct ownership for.  The challenge needs to be self-evident, and the associates need to not only be affected by the challenge, but also have the ability to influence the outcome.  They have to be direct stakeholders.

Means to deploy are suitable and accessible resources that can be used to address the credible challenge. 

Conviction to deliver is the ability to define the credible challenge, effectively manage the means to deploy and stay the course in light of inevitable failures (and hopefully some successes too).  A pretty good definition of leadership even if I do say so myself J.

So just add those elements and you should be delivering world-class innovation in no time, right?  Probably not.  What makes this difficult is that the larger the business, the harder it is to define a credible challenge.  Conversely, the smaller the business, the more limited the means to deploy. 

The tension between 'credible challenge' and 'means to deploy' with respect to business size

Logically therefore, a ‘sweet spot’ exists – a size where a business can find optimal balance between the two.  I suspect that this ideal size is not fixed, but is actually a function of the organization and culture in place.  In fact, the optimal balance could even be different depending on the defined challenge.  Probably some other things I haven't thought of, too.

One of the well-documented exceptions I mentioned earlier, W.L. Gore and Associates, is renowned for both innovative success and revolutionary culture, and it’s pretty obvious that the second enables the first.  However, I think a key component of this is that Gore’s culture and organisation actually enables the concept of credible challenge to exist amongst a larger group size, which therefore supports a greater means to deploy than would typically be expected with such a large group.  Even so, Gore actively prevents a business unit from growing beyond a couple of hundred associates.

OK, so we’ve covered off the three elements we need to put in place, and why that’s not as easy it sounds – but how do we diagnose what is missing and adjust accordingly?  Don’t forget that this is not a case of implementing a list of stuff, but instead an attempt to deliver a best compromise across competing elements.  So being able to identify the status and adjust the balance is critical.

The effect of missing elements with the pursuit of innovation 

 

If your business can’t seem to pursue an objective long enough to deliver a result, then you’re probably directionless and need to focus on your conviction to deliver.

Continuously executing every idea you have, until you run out of resource?  A clear need to define a credible challenge and avoid being clueless.

If the problem is associates being frustrated by a lack of resources needed to make things happen, the means to deploy needs to be adjusted so that your associates don’t feel so powerless.

Of course, it’s possible to have two or even all three of these issues, but by far the most difficult to address is the credible challenge.  So in the next article we’ll discuss some thoughts around how to narrow the field at least a little.

Time, Cost, Scope, Risk, Quality and Benefit - and how they relate

So…  I felt like revisiting an old favourite this time, something I am sure that many, if not most, have seen before.  But this time I want to push it, stretch the idea as far as it will go.

The diagram below describes one of the central ideas behind Project Management – that it is necessary to balance Time, Scope and Cost (or Resource) to deliver a project.  For example, when a project is planned, the amount of Time, Scope and Cost is defined.  If something occurs which is not to plan, a compromise must be found.  Possible responses might be to reduce Scope to ensure that Time and Cost are still delivered as planned.  Or increase the amount of Time and Cost so that the full Scope is delivered.  In reality it is rarely that simple, but you get the idea.

These three parameters could be classified as inputs, and changes to any of them alters the shape of the project.  This in turn will often affect the planned outcome of the project – the Objective.  If we develop our diagram a little further, at this point we can plot our Objective on a fourth scale, the Benefit scale.

As the project progresses, we can draw lines from the planned departure points of each input towards our objective.  The length of line could denote how much of each input parameter has been consumed.  Errors in planning alter the departure point of each of these lines, as the assumption of how much of that input was required was in error.  Using this method it is clear to see that the closer the project is to completion, the harder it is to adjust for incorrect assumptions and still hit the objective. 

Further, it is apparent that should the Objective change partway through a project, although it may be possible to adjust it will also mean that consumption lines will not be straight (and therefore less efficient).

Those more familiar with Project Management will at this point be wondering about Risk and Quality – where do they fit in this model?  Let’s start with Risk.  Risk is by definition an ambiguity, and can easily be considered as a cone around each of our input parameters.  The earlier a Risk is to eventuate in a project, the greater the potential impact on the eventual objective.

Finally, Quality - assuming that our definition is consuming our three input parameters as planned to deliver our Objective.  This is by far the simplest concept, so much so I am not even going to draw it on the diagram.  Delivery of a Quality outcome is simply bringing the three input parameters together at the point of Objective, despite changes in project requirements, erroneous assumptions or eventuating Risk.  The greater the variance, the greater impact on Quality.  The key to delivering Quality is therefore alignment.  If all those involved in a project fully understand the input parameters, the Objective, the Risks, and most importantly – how these relate to each other, the result will inevitably be a Quality outcome.

Metrics that Motivate

Empowerment is generally a key factor when considering motivation, and is particularly important when defining appropriate metrics.  Creating a balance between a framework for success and freedom to operate is vital to ensure those contributing to your business are empowered to deliver.

Before we get into the challenge of empowering through metrics, we first need to understand how to evaluate whether a metric is ‘good’.  Simply, there are two key factors; clarity of ownership and clarity of expectation.  If your meeting consists of working through your metrics rather than what action you plan to take as a result, it will be because one of these factors is not clear.  The quadrant below can help diagnose when this is happening.

Diagnosing lack of clarity with respect to metrics

 

Creating clarity at first glance may seem simple, but in reality it can be quite complex to deliver the levels of clarity your organization needs.

 

As a minimum, expectations need to consider timescales, method of measurement, level of response, target and acceptable tolerance.  Ownership should include scope of inclusion, categorization and frequency of reporting.  As with many things, the devil is in the detail, and these factors become more involved as they are explored.

Now, back to empowerment.  It is important to remember that every metric is a constraint.  They shape the desired outcome.  Therefore, the more there are, the more disempowered the owner will feel.  A real danger is that so many metrics are put in place they become mutually exclusive, making success impossible.

Therefore, the fewer metrics the better, right?  Almost.

Metrics do drive behavior, and there has to be some balance.  If you put in place just a single metric for the Customer Service Manager, it would probably be to reduce the number of customer complaints.  The easiest way to do that is to reduce the number of customers served, by giving service so bad that people simply don’t stay as customers.  There is no balance, and the eventual outcome is bad for business. 

I know that is a pretty extreme example, but it serves to make the point.  I have seen many situations where this kind of behavior has been at play, and the overall business suffers as a result.

So, there is a need to create a balanced pair of metrics for each key accountability.  These can be distilled through asking two simple questions;

 

1.       What single metric should be used to establish whether the role has been done?

2.       What balancing metric should be used to establish whether the role has been done well?

 

For example, the role might be accountable to drive growth, and so annual sales growth might be the primary metric.  The balancing metric could be the percentage of profit for the total business.

 

I challenge you to give it a try, either for your own or another role - it would be great to hear how you went!